Mexico kicked off the week with a potential airline mega-merger under antitrust review and a warning sign from the country’s biggest mortgage lender.
Colombia’s debt trajectory stayed in focus as fiscal stress pushed the government toward emergency tools. Argentina’s fiscal story tightened, with the president promising “deficit zero” execution even after Congress changed the budget math.
Peru moved closer to a new trade deal with Thailand. Ecuador showed a striking split between record reserves and a deficit problem driven by spending. Chile’s mining sector opened a long-dated power procurement race.
Paraguay signaled electricity tariffs may start moving automatically again, with industry first in line. Uruguay’s largest private bank said credit is still expanding even as the economy cools.
1. Mexico: Sheinbaum backs Viva–Volaris tie-up, antitrust review comes next
Mexico’s president said the new Viva Aerobus–Volaris union will be reviewed by the national antitrust authority and must stay within the law.
The airlines said the deal would create the country’s largest low-cost airline group. Together, they account for roughly 69% of passengers carried through October.
Why this matters: Airline consolidation can reshape fares, routes, airport slots, aircraft leasing terms, and credit risk for suppliers and lenders.
2. Mexico: Infonavit delinquency hits 19.40% as its MXN 1.9 trillion ($106bn) mortgage book stays dominant
Infonavit’s delinquency index rose to 19.40% by September, far above commercial banks’ 3.11% for housing credit. The institute runs a mortgage portfolio of about MXN 1.9 trillion ($106bn), making it the system’s key reference point.
Officials say large-scale loan restructurings are underway, while the market worries about the signal this sends to housing finance.
Why this matters: If the state’s main mortgage lender deteriorates, it can raise perceived risk across housing, push up funding costs, and chill private credit expansion.
Latin America Investor Monitor: Ten Policy And Corporate Signals (December 22, 2025). (Photo Internet reproduction)
3. Colombia: External debt seen ending 2025 at 58%–60% of GDP as emergency measures replace a failed financing law
Colombia’s external debt is projected to close 2025 around 58%–60% of GDP, below earlier official projections but still high.
The article links the pressure to a deficit above 6% of GDP and weaker revenue, after Congress sank the financing law. The government then moved to an emergency economic decree path tied to raising COP 16 trillion ($4.1bn).
Why this matters: A debt ratio near 60% of GDP narrows policy room, raises sovereign funding sensitivity, and can spill into bank funding, corporate spreads, and project execution.
4. Argentina: Milei says he will not veto the 2026 budget and will reallocate spending to keep “deficit zero”
After Congress passed the budget but left in spending tied to disability and university financing, the president said he will not veto the bill.
Instead, he plans to “accommodate” the numbers through reallocations inside the budget to preserve the deficit-zero anchor. He also said he will not raise taxes to do it.
Why this matters: Markets price credibility, not slogans; how the government executes reallocations will affect payment risk, regulated-sector cash flows, and confidence in 2026 financing plans.
5. Argentina: 2025 tax relief package reshapes costs for exporters, autos, and imported tech
A year-end review of the government’s tax actions highlights a push to reduce or remove several levies and tariffs, with much of the relief concentrated in agriculture, autos, and technology imports.
Measures cited include the end of Impuesto PAIS, changes to internal taxes on cars, and repeated adjustments to export duties and import tariffs.
Why this matters: Sector-specific relief can change margins fast, redirect investment, and alter who wins credit allocation when banks and suppliers re-price risk.
6. Peru: Peru and Thailand reach “substantial closure” on a comprehensive trade agreement
Mincetur said Peru and Thailand reached agreement on the hardest chapters of a comprehensive deal, leaving only technical issues before signature.
The next step is legal review in English, Spanish, and Thai, followed by signing and entry into force. Peru’s exports to Thailand totaled about $92 million from January to October 2025, led by products that include seafood and minerals.
Why this matters: A new trade deal can unlock tariff savings and rules-of-origin certainty, which often drives long-term capex decisions in export chains.
7. Ecuador: Record reserves meet a deficit squeeze as spending rises and diesel subsidy reform rolls in
Ecuador’s central bank reported reserves hit a record $10.245 billion on December 12, with a large share explained by higher gold valuations.
At the same time, Primicias’ fiscal coverage says 2025 spending growth pushed the deficit back up, even as the government pursued measures such as diesel subsidy removal. Diesel was held at $2.80 before moving to a market-linked scheme starting December 12.
Why this matters: In a dollarized system, reserve strength helps confidence, but persistent deficits can still force policy tightening and raise risk premia for banks and issuers.
8. Chile: BHP launches an “expression of interest” for a mega power tender for its mines
BHP opened an initial process ahead of a large electricity tender for its Chilean mining operations. The volume is estimated at 4–6 TWh per year, with supply set to start on January 1, 2032.
Why this matters: Long-term power auctions set a floor for mining operating costs and create bankable pipelines for generators, grid investment, and project finance.
9. Paraguay: ANDE prepares a semi-automatic electricity tariff formula, first change mechanism since 2017
ANDE said it is still finalizing a formula for a semi-automatic tariff adjustment, described as the first since 2017.
The utility signaled no general hike for 2025, but it is studying gradual, automatic changes focused on large users and industry, including differentiated tariffs already applied to crypto mining. It also said the system needs around $600 million per year in distribution investment.
Why this matters: Utility tariff rules feed directly into industrial competitiveness, inflation expectations, and the utility’s ability to finance grid upgrades.
10. Uruguay: Itaú says credit keeps rising across segments, with corporate loans near $4bn and ROE around 30%
Itaú’s CEO said the bank expects to close 2025 with ROE around 30% and profits above $200 million.
He said corporate loan stock is near $4 billion, and that credit growth remains broad-based, including strong expansion in SMEs. He also warned that proposed changes to bank secrecy would be harmful.
Why this matters: When the largest private bank reports rising credit and stable profitability, it is a real-time signal on financing conditions, risk appetite, and policy uncertainty.
